Damien Hirst responded to his mother’s question pragmatically. “For the love of God,” he thought, “now that’s a good title.” So he used it for the most expensive artwork he or anyone else has ever had made – his diamond and platinum skull, created in 2007. “It’s beyond bling, super-bling,” he laughs. He was astute enough to say so before anyone else.

In 2007, at the delirious height of the contemporary art boom, queues formed at the White Cube Gallery in London’s Mason’s Yard for the unveiling. Sparkly, surprisingly small and fragile, it was carefully spotlit in a blacked-out room – a platinum skull covered with 8,600 small diamonds and a single large pear-shaped pink diamond embedded in the forehead. It was crafted by Bent and Skinner, jewellers in London’s Hatton Garden. Only the teeth, parted in a last deathly exhalation of breath, survived from the 18th-century European skull Hirst had found in a north London shop. Pre-empting wisecracks, Hirst called the show Beyond Belief.

The asking price was £50m but no one was tempted, and after some months it was announced that the piece had been bought in by a consortium of investors, two-thirds of it owned by the artist himself, 10 per cent by his gallery, White Cube, and the remainder by an anonymous group. Since its initial month-long show, “For the Love of God” has only been exhibited for six weeks at Amsterdam’s Rijksmuseum, in late 2008. Now, after almost two years in a bank vault, it is back on display in another blacked-out room, this time at the Palazzo Vecchio in Florence.

The original plan had been a world tour but this proved too expensive: the insurance value of the piece has risen to $100m. Hirst says it’s not currently for sale but he admits that his investors expect a return on their money “in due time”. A prominent display in Florence must surely improve its chances of finding a buyer. Could this show be a prelude for the skull going to auction? Hirst’s people won’t say.

I’ve done television interviews with Hirst several times over the years, and always enjoyed it. In 1993, he was a fresh-faced cocksure 28-year-old. We stood in front of “Mother and Child Divided” – a cow and a calf sliced in two – at the Venice Biennale and he joked about doing an elephant in formaldehyde. I was haunted by “Away from the Flock” in 1993; I loved the first shark – the most sensational thing about Sensation at the Royal Academy in 1997: and I stood back and admired the sheer audacity of “Hymn” (1999), the 20ft high anatomical sculpture. Only Damien Hirst – and perhaps Jeff Koons – had the chutzpah to pull such things off.

But things have changed. His paintings at the Wallace Collection last year had a critical mauling. “Poisons and Remedies”, at the Gagosian Gallery in London’s Davies Street during last month’s Frieze, was as perfunctory a show as I’ve ever seen by him – a dozen skull and pill paintings done by an artist on autopilot.

When we meet at his London headquarters, adjoining terrace houses not far from Oxford Street, there’s a sense of taking stock. At 45, he’s begun to assess his achievement. We sit in his office surrounded by art: a Jeff Koons stainless steel “Elephant” sits on his desk; on the walls, Richard Hamilton’s famous image of Mick Jagger’s arrest in 1967, “Swingeing London”, and a large John Hoyland abstract. Four Francis Bacons are out on loan, he says. There are sundry skulls on the shelves, real and manufactured. Slogans have been slapped across his laptop; the words “vomit” and “suck” catch the eye.

Hirst, wearing large tinted wraparound glasses, has just had laser treatment on his eyes. Aptly, his skull is shaven; his T-shirt is a reminder of his loyalties, an image of the late Joe Strummer.

Self-belief has never been a problem but it’s always been tempered by candour and humour. “I tell you what I do like,” he says gleefully. “I like walking down the street and getting recognised by businessmen. I didn’t before because their wives bought a bit of my art and the husband thought it was rubbish. But now businessmen are thinking, that man’s made £100m in a single night.”

He is referring to the proceeds of the Sotheby’s sale on September 15-16 2008, “Beautiful Inside My Head Forever”. He sent more than 200 works straight to auction from his studio and sold some 93 per cent of them, just hours after the collapse of Lehman Brothers. “People still come up and tell me it was a stroke of genius.”

I had interviewed him a few days before the auction and he was palpably nervous. Looking back now, he says that “it was too close to call. I’d love to say we waited and waited until the time was right. It was kind of crazy timing. We were lucky.”

He promoted the sale as a last chance to buy his butterfly and spin paintings and cabinet pieces. “I thought it was just a perfect point to say that’s it and do other things.” Studio production of these ended, but not of the more profitable spot paintings. He now also has a team of some 30 assistants painting away for him, working on a newish line, the so-called “Fact” paintings, copied from photographs.

Hirst is also still painting in his “little garden shed” in Devon – as he has since 2006. He’s sanguine about the reception of the Wallace Collection show: “I was up for a slapping,” he says. “I didn’t look at the paintings and say, ‘Oh my God! The critics are absolutely right, I’m going to hang myself.’ Andy Warhol says if anyone hates it, do more.” Hirst makes a painterly swirl in the air with his hand.

The idea of another big auction doesn’t seem to appeal. His ebullient business manager, Frank Dunphy, who badgered him into going to Sotheby’s, retires at Christmas at 73. Hirst feels lucky to have been so well represented. But he is planning a big sculpture show in five years. As usual, the work will be made at the Pangolin Foundry in Gloucestershire and he already has a title – Treasures from the Wreck of the Unbelievable – “a kind of fantasy on a ship that went down”. My interest is aroused: this sounds like Hirst at his imaginative, outrageous best. I tell him he’s always been good at titles – “I should’ve been a poet,” he laughs.

During Frieze, White Cube sold a cabinet piece for £3.5m and Christie’s a huge butterfly painting for £2.1m. “We all went through a dip when the recession hit,” he says. “It’s a lot more difficult to make a sale but that’s better really,” he says. “You start to think you’re Midas or Jesus if you’re selling everything you make.”

Hirst ranks the diamond skull among his top four works of art, along with “A Thousand Years” (1990), flies, maggots, a cow’s head; “The Physical Impossibility of Death in the Mind of Someone Living” (1990), the first shark; and “The Golden Calf” (2008), a calf with gold horns and hooves.

A ticket to see the diamond skull at the Palazzo Vecchio is €10: the visitor also gets to see the palace museum. In the first weekend some 1,500 people a day took the tour, an increase of 40 per cent. An Italian company, Arthemisia, making a first foray into contemporary art exhibition, is handling the €1.6m costs and is expecting 210,000 visitors. Hirst doesn’t get a fee.

Hirst talks about the diamond skull almost as if it’s a mythical treasure – something that Indiana Jones might don his fedora for, that criminal gangs might plan to steal. In time, he imagines people fighting over it, dying for it. He sounds almost disappointed that he can’t keep it at home – “The insurance companies would go mental.” He’d evidently like it to end up in an international museum or gallery.

As I am about to leave his office, Hirst and his assistants are trying on wigs: there’s a Ramones theme to the office Christmas party; the place rings with laughter. Hirst, in the silliest of wigs, asks whether I fancy some crisps or chocolate, pulling out a drawer stuffed full of both. I help myself to a chocolate bar. It’s a childish treat from someone with a lot of money who remembers what it was like to be born with very little.